Car shoppers finding fewer 0% finance deals

Avoid These 8 Common Car Dealer Tricks |

Car shoppers finding fewer 0% finance deals

Auto dealers have lots of ways to make the most off of every sale.

Common car dealer tricks range from interest rate markups and dealer add-ons to longer and longer loans can drive up the cost of buying a new car or truck.

If you’re not careful, you can wind up paying more to buy and finance a new car or truck than you really need to. That’s a total waste of money for anyone trying to build financial security for themselves and their families.

Dealer trick #1: Preying on your lack of information

There’s nothing a salesperson loves more than a clueless car shopper. You can’t negotiate a fair price for a vehicle when you don’t know what that price should be.

Before taking off for the dealership, go to and Kelley Blue Book to find the average transaction price for the car or truck you want to buy.

Or add the Edmunds or Kelley app to your smartphone and punch in the model, trim level, equipment packages and other options listed on the window sticker for any car on the lot.

Either way, you’ll know what car buyers are actually paying for the ride you’re considering, and it’s usually hundreds, and often thousands, of dollars less than the suggested retail value posted on the window.

You want to be the smart shopper who pays a little less than the average transaction price.

Dealer trick #2: Making it all about the monthly payment

Salespeople often ask potential buyers what’s the biggest monthly payment they can afford.

With that number in hand, they’ll calculate the most you can possibly spend and still hit that monthly payment by dragging out the loan for as long as possible.

Then you’ll be shown cars and trucks in that price range, which is often higher than what you wanted to spend, while you’re reassured that a better ride is well within your budget.

Let’s say you came in to buy a compact sedan that cost about $20,000 but let slip that you could afford a payment of $450 a month.

The salesperson immediately recognizes that a 60- or 72-month loan would allow you to buy a $25,000 midsize sedan while keeping your payment at about $450 a month — and that is what he or she will try to sell you.

The bigger sticker price, and longer loan, both mean more money for the dealership.

Use the 20/4/10 rule to see what you can really afford.

It says you should put down at least 20% on a vehicle, finance it for no more than four years and not spend more than 10% of your monthly income on your auto expenses, including your note, maintenance and insurance.

Dealer trick #3: Imposing finance charge markups

You’ve picked the car you want to buy, and now the finance manager is searching his computer for the best deal on a loan. The dealership is not required to tell you the cheapest loan you’ve qualified for and can legally pad the interest rate with a couple percentage points for themselves.

Let’s say the bank or finance company says you’re eligible for a 5% loan, but the finance manager tells you 7%.

On a $22,000 five-year loan, that extra 2% will add an extra $1,277 to your payments. The lender is in cahoots with the dealer. It collects the extra money, keeps half for itself and sends the other half back to the dealer.

While this is quite legal, the U.S. Justice Department and the Consumer Financial Protection Bureau have been investigating whether dealers and lenders are prone to discriminate against women and minorities by adding markups to their loans more often.

Dealer trick #4: Making deceptive payoff promises

Let’s say you’re looking to buy a new car but still have a balance on your current car loan. To close the deal, a salesperson will often promise: “We’ll pay off your loan no matter how much you owe.”

Most dealers will make up for that loss by charging more for your new ride, offering less on your trade-in and imposing a finance charge markup. Unscrupulous showrooms pay off your old loan, just as they promised, then secretly add that amount to your new loan.

To get away with that, they’re counting on you to focus on the monthly payment and ignore the total amount you’re financing.

Initially you might have been told that your monthly payment would be around $400, which is what it would be if you financed $20,000 over 60 months at 6%.

When you sit down to sign the papers, the finance manager points to the monthly payment line and, sure enough, it’s $397.

What you don’t see is that the dealer added that $4,000 payoff to the balance on your loan and financed that $24,000 over 72 months, committing you to pay on that car for an additional year.

RATE SEARCH: Shop auto loan rates.

Dealer trick #5: Pushing you to lease

Some salespeople may steer you to leasing because it may get you a new vehicle at less than half the monthly payment it would cost to buy.

The problem is, you’ll still be making years of monthly payments — at the end of which you will own nothing.

If you need to lease a car to “afford” it, you probably can’t afford it in the first place.

Read our story about why leasing is a bad deal.

Dealer trick #6: Saying the deal is only good now

Salespeople love to pressure buyers for quick sales with things “the deal is only good today.”

It’s a common tactic to prevent you from checking other dealerships or having second thoughts. They’re worried if you leave the lot, you won’t come back.

Chances are you’ll get the same deal if you return.

The one exception would be around the end of the month when incentives provided by the car companies — rebates and discount loans — often expire.

You don’t want to make impulse decisions or be pressured on such a big purchase anyway.

Don’t be scared to sleep on it.

Dealer trick #7:  Trotting out the old bait-and-switch

You see an ad for a great price on a car you’ve been considering.

Then you get to the showroom and find that’s only for a stripped-down model, or trim level in auto lingo, which no one ever buys.

The salesperson is sympathetic. When was the last time you saw a car with crank windows and no air-conditioning?

Over the next hour, he or she shows you better-equipped versions. By the time you finally see the car you thought the ad was touting, you’re paying $4,000 more.

So ignore the prices you see in ads.

Most dealers now have their inventories on their websites, allowing you to find the fully equipped model you’re really interested in buying before leaving home.

Take those VINs (vehicle identification numbers) or stock numbers with you to the showroom.

Not only will you have a more realistic idea of how much the car you want really costs, it shows the salesperson you did some homework.

Dealer trick #8: Selling worthless or overpriced dealer add-ons

Dealers boost their profits by selling all sorts of accessories, from roof racks to premium sound systems.

Take a careful look at the cost. You can usually get the same thing for half price or less at electronics or auto parts stores.

Be especially alert for surprise add-ons salespeople try to slip in as you’re wrapping up the deal.

VIN-etching is the latest add-on to avoid. Also, be on the lookout for paint protection, fabric protection, rust-proofing and car alarms.


How to Finance a Car at 0% Interest

Car shoppers finding fewer 0% finance deals

Paying no interest on a new car loan may sound almost impossible. But it is possible for people with very strong credit. And it’s something you should definitely consider, because over the life of the loan it can save you hundreds of dollars.

Rates as low as 0% are only available from the “captive finance companies,” which are the lending arms of the carmakers. So, Ford Motor Company uses Ford Motor Credit Company to lend money to shoppers who want to drive a Ford. And each carmaker has its own captive lender.

The car companies use the low financing to attract buyers, and they make the profit on the cars rather than on finance charges. This doesn’t mean you have to get a loan from the captive finance company — car dealers are happy to accept money from any institution — but this is where you can find the lowest rates.

How to find 0% financing

If a vehicle isn’t selling quickly enough, the captive finance company offers 0% financing as a car-buying incentive to entice shoppers to choose that model. Usually, these no-interest offers are available for only a month at a time.

Most 0% financing deals are widely advertised in newspapers and on television. However, you can go to a carmaker’s website and search for terms such as “incentives and offers” or “special offers.

” For example, Ford lists all vehicles that have incentives — including 0% financing. Click on any car and you’ll see all the offers available: special finance rates, cash rebates and lease specials. Car site Edmunds.

com also lists incentives from all the manufacturers and provides some details on different loan terms.

If the car has several incentives available, such as 0% financing or customer cash back, how do you decide which is better? It depends on a number of factors, such as how long you’re planning to finance the loan. To figure out which would save you more money, run each scenario through NerdWallet’s auto loan calculator.

Who will qualify?

It’s probably no surprise that carmakers will offer 0% financing only to buyers with high credit scores, though the credit ranges may vary among lenders and few dealers list their ranges.

For example, to get 0% financing, a regional offer on Toyota’s website requires “well qualified Tier 1 or Tier 1+ credit customers.

” Toyota dealerships define Tier 1 as an auto-specific FICO score of 690-719 and Tier 1+ as 720 and above.

If you haven’t done so recently, check your credit score to see if you meet the lender’s requirements.

If you’re unsure about how the incentive works, or whether it’s still available, you can try calling the finance or internet manager at the dealership for some information.

But be prepared — often the finance manager will urge you to come to the dealership in person or encourage you to remotely fill out a credit report to see if you qualify.

Bait and switch?

Some shoppers have suggested that 0% financing is a “bait and switch” tactic by the automotive industry. The dealer advertises low rates to attract shoppers, gets them hooked on a car, then apologetically informs them that they don’t qualify for 0%.

This might be true in some cases, but if you know your credit score, and understand the terms of the incentive, most dealers will give you the advertised offer so they can sell another car. In those cases where you fall just short of 0% financing, there might still be below-market rates available. So, instead of paying 0%, you might qualify for 1.9%.

If you’re uncertain if you’ll meet the requirements for 0% financing, it’s smart to get preapproved for an auto loan before you go to the dealership. Once you know your preapproved interest rate, the dealer will be eager to undercut that rate to get you to finance with them.

Make the most of low rates

Often, car salespeople will tout 0% interest saying, “Hey, it’s free money!” While it reduces the financing charges, don’t let it sway you to buy a car you can’t afford or don’t need.

Also, avoid assuming that, since you saved so much on interest, you might as well buy extras such as an extended warranty or additional car alarms — high-profit items sold in the finance and insurance office, just before you sign the sales contract.

  • Down payment: Make a down payment of 20% of the car’s sale price so you won’t be upside down on the loan.
  • Loan term: While longer loan terms are available, avoid stretching the repayment period beyond 60 months (5 years).
  • Extended warranty: If you want the peace of mind of an extended warranty, you can include the cost in your no-interest loan. But decide ahead of time if you really need a warranty in addition to the included bumper-to-bumper warranty.


What You Should Know About 0% APR Car Deals

Car shoppers finding fewer 0% finance deals

When it comes to finding a bargain on financing, 0 percent APR car deals are hard to beat. Numerous automakers offer interest-free auto loans in an effort to attract new, well-qualified customers and sell more vehicles.

However, when shopping for a new vehicle, you should always proceed with caution, even if a zero APR offer is on the table. In some instances, getting an auto loan from an outside lender might work out better in the long run.

What is a 0% APR?

When you take out a vehicle loan, the lender will typically charge you interest in exchange for financing. Interest and fees, after all, are the primary ways that lenders make money. As you repay the loan, you reimburse the lender for the money it paid the auto dealer on your behalf. The interest you pay helps the lender earn a profit.

With a zero APR auto deal, however, you essentially borrow money for free. Your monthly payments reimburse the lender for the money it paid the auto dealer, but no extra money from your pocket goes into the lender’s bank account.

Financing a car interest-free almost sounds too good to be true. But in reality, these financing deals are a tool that auto manufacturers can use to sell more vehicles.

Lenders that offer 0 percent financing are known as captive finance companies and are linked to the auto manufacturers themselves.

Some examples of captive lenders include Ford Motor Credit, GM Financial, Nissan Finance, Toyota Financial Services and more.

So if Ford wants to sell more 2020 F-150s due to overstock issues, it might offer zero APR loans to select borrowers through its own financing arm.

No-interest financing seems more affordable on the surface, but that’s not always the case. When auto manufacturers offer 0 percent financing, they may try to make up for “lost” income in other ways.

For example, a dealership may push hard to sell you extra add-on products extended warranties or gap insurance with your vehicle.

You also might have to forgo benefits bonus cash or rebates that would normally bring down your purchase price.

Finally, you typically need excellent credit to qualify for these special financing deals. So while a zero-interest loan might entice you to show up at a dealership for a test drive, automakers know there’s a chance that you might not qualify for the offer.

How do I qualify for a 0% APR car deal?

Zero percent financing deals are generally reserved for borrowers with excellent credit — typically classified as a credit score of 800 and above. You’ll want to review your credit reports on your own before you start shopping for auto financing.

Also keep in mind that each lender has its own definition of excellent credit, and qualification requirements could vary from vehicle to vehicle.

Because zero APR qualification standards vary so widely, your best bet is to call the auto dealership in advance. Ask what criteria you need to meet to qualify for interest-free financing on a specific vehicle.

Aside from your credit score, an auto lender may consider additional factors when it reviews your application, such as:

  • Debt-to-income ratio.
  • Employment history.
  • Income and address verification.

Regardless of the condition of your credit — good, bad or excellent — you should take the time to seek preapproval from outside financing sources as well. A preapproved offer can help you compare your options and give you a backup plan in the event that you don’t qualify for the automaker’s special offer.

Interest-free financing might be a great deal for some borrowers. Still, there are a few potential pitfalls you should look for when considering this type of financing.

  • Limited selection: Interest-free financing may only be available for certain types of vehicles. First, the car you purchase will almost certainly need to be new. Auto manufacturers also tend to reserve special financing offers for vehicle models where there’s a surplus in stock that they need to move.
  • Limited repayment options: Depending on the offer, your repayment options with 0 percent financing may be more limited. Often you’ll have less time to repay the loan than you might have otherwise. Of course, there’s nothing wrong with repaying a loan quickly, but you should be sure that you can afford the higher monthly payment without straining your budget.

0% financing vs. bonus cash

Automakers want you to purchase your next vehicle from their company, not a competitor. This is a key reason why 0 percent financing offers exist in the first place. In this same interest of attracting new customers, auto manufacturers often offer bonus cash rebates to buyers.

Sadly, an auto manufacturer might not let you take advantage of both 0 percent financing and bonus cash. If you’re faced with this dilemma, you’ll have to decide which savings opportunity is the better deal.

An auto loan calculator can help you compare apples to oranges when it comes to 0 percent financing versus bonus cash incentives. Sometimes taking the cash rebate an auto dealer offers along with a higher loan APR will make the most sense as far as overall savings. In other instances, 0 percent financing might be the clear winner.

Should you take the cash and refinance later?

You might have to accept standard financing through the automaker’s captive lender to qualify for certain types of cash incentives.

In exchange, there’s a chance that you’ll receive a higher interest rate than you might through your bank or an outside lender.

Faced with this choice, some borrowers will opt to take advantage of the cash incentive and try refinance the loan elsewhere at a lower APR.

Depending on your situation, refinancing your new auto loan in a few months might be an effective strategy. But there are some downsides to consider first. Namely, taking out two auto loans back to back (the original and the one you refinance it with) might harm your credit.

Multiple loans will result in at least two hard credit inquiries on your credit reports. And worse, both lenders will ly report the loans to the credit bureaus. Adding two loans to your credit reports, even though one pays off the other, can reduce the average age of accounts on your credit reports. In terms of credit scoring, the older the average age of your accounts, the better.

When is a 0% APR deal not worth it?

It might make sense to forgo special manufacturer financing offers in the following situations.

The repayment terms don’t fit your budget

Zero-percent or low-interest car loans often come with shorter finance terms. Depending on your income, a shorter loan term could make your monthly payment unaffordable.

For example, if the 0 percent car loan lasts for four years in instances when you would typically finance for five years, the cost difference can be meaningful.

On a $25,000 car loan through the manufacturer for four years, your monthly payment would be about $520. By comparison, a $25,000 car loan financed over five years at a 4 percent interest rate would feature a monthly payment of $460.

You can use an auto loan calculator to do the math for your prospective loan.

Financial experts often recommend keeping your monthly vehicle payment to 20 percent or less of your monthly take home pay. And some experts suggest that you cap your car payments at 10 percent of your gross income.

You’re tempted to purchase a more expensive vehicle

You shouldn’t decide to increase your auto budget just to qualify for special financing. If you were planning to pay $10,000 cash for a pre-owned vehicle, taking on a new auto loan with a $30,000 price tag just to take advantage of no-interest financing probably isn’t a wise financial move.

Cash rebates offer you more savings

Cash back rebates often don’t apply to buyers who use the manufacturer’s special financing. So if you crunch the numbers and cash rebates offer you a bigger savings opportunity, a 0 percent financing deal wouldn’t be worth it.

Imagine you can take advantage of a $4,750 cash back offer on a new vehicle purchase. On a new vehicle with a $30,000 price tag, that incentive could bring your purchase price down to $25,250.

If you financed $25,250 at a 4 percent interest rate for five years, you’d pay $2,651 in interest.

In that scenario, your total cost would be $27,901 (as long as you didn’t add on extra products extended warranties or incur any other financing fees).

Alternatively, you could pay the full $30,000 purchase price and opt for a 0 percent APR. Assuming no add-on products or fees, you’d still pay $2,099 more in this scenario than you’d pay by taking the cash rebate.

Do’s and don’ts of 0% APR deals

If you review your options and decide that a 0 percent APR auto loan is the right choice for you, these do’s and don’ts may help you navigate the process.


  • Negotiate the purchase price before you ask for the 0 percent APR offer.
  • Get preapproved for an auto loan before you visit the dealership.
  • Confirm that you can afford the monthly payment.
  • See if the manufacturer offers a cash back incentive program that you can combine with the special financing offer.


  • Accept a short-term loan with a large monthly payment amount you can’t afford.
  • Opt for a long-term loan to lower your monthly payment if it will cost you more overall.
  • Choose 0 percent financing over a cash back incentive without comparing the potential overall savings.
  • Skip the down payment if you can afford one.

Learn more:

  • Auto loan calculator
  • Current auto loan rates
  • How much car can I afford?


February Car Deals Are There (If You Look Hard)

Car shoppers finding fewer 0% finance deals

Good new-car incentive deals are still numerous in February, including some 0% loan offers for 72 months — and even a few 2021 models with offers at 0% for 84 months, the Nissan Titan pickup and the Jeep Compass crossover.

But those exceptional deals are rare, and deals in general are getting less generous on average this months. Buyers looking for deals will find them, analysts say, but they’ll have to look harder than in December and January.

“We’re starting off the year with low incentives,” said Thomas King, president, data & analytics and chief product officer for J.D. Power, in the recent Auto Summit 2021 conference online.

That’s partly because it’s just that time of year. Incentives typically rise at the model-year changeover in the fall, and hit another peak in November and December, thanks to Black Friday and year-end deals. Then incentives taper off in January and February.

With 2020 in the rearview mirror, it’s now clear that 2020 year-end incentives were substantial, but they were a bit disappointing compared to previous years. In retrospect, analysts said incentives hit their peak in April and May 2020, in the early days of the coronavirus pandemic. More on that later.

One thing that hasn’t changed is that January and February are typically the slowest sales months of the year. That’s partly because of bad winter weather. It’s also partly because incentives in November and December blow the budget for incentives for the following months, and pull ahead sales that otherwise might have happened in January and February.

Fewer Leftover Vehicles to Sell at Discount

Also typical for February, cars and trucks from the previous model year have mostly been sold by now. In 2021, that would be 2020 models, which first went on sale back in the fall of 2019 and may have accounted for one in four January sales.

That’s comparable to a year ago, and another reason why car companies are not pouring on the incentives. A big oversupply of last year’s models would motivate bigger discounts, but that’s not the case.

Conversely, if you can find a 2020 model, the car companies are probably more eager to sell them, now that we’re one more month into the next calendar year.

In its February offer, which expires March 1, the Ram brand upped its cash incentive on certain versions of the 2020 Ram 1500 pickup to $4,500, and added 0% loans for up to 72 months. In January, the cash offer was $1,500, and 0% loans were limited to 36 months, plus $500 cash.

Rival Ford Motor Co. is also rolling out the new Ford F-150 pickup, which makes the full-size pickup segment more competitive.

For this story, Forbes Wheels looked at December incentives that expired Jan. 4, January incentives that expired Feb. 1, and newly announced February incentives that mostly expire March 1. (Ford Motor Co. incentives expire March 31.) Offers vary by region of the country, and may apply only to certain trim and equipment packages within a model lineup.

Finance offers only apply to loans and leases from the manufacturer’s “captive” finance company. Offers are subject to change without notice.


For Now, Bye-Bye Employee Pricing

Two things are obvious. One is, many 2020 models were listed among the December and January incentive deals, but fell off the list of February incentives which mostly expire March 1. Examples include the 2020 Chevy Suburban and the 2020 Chevy Tahoe.

On the Chevrolet web site, instead of a specific incentive, a link for the 2020 Suburban and the 2020 Tahoe says, “Locate a dealer to learn abfers.” That implies some dealers may still have some 2020 models, but Chevy’s focus has shifted to selling the 2021s. The same is true for a lot of other brands and models.

The second thing is, many of the showier year-end offers have disappeared since January. Among the December incentives were “Employee Pricing” offers from General Motors and Stellantis, the former Fiat Chrysler Automobiles. Employee pricing is absent now after the New Year. Jeep also dropped “no payments for 90 days” offers for many models, which were in force in December.

There are also fewer incentive offers aimed at rewarding loyalty or conquesting owners from other brands. Such offers were also more common in December.

The 2021 Chevrolet Suburban is an exception to the rule. It has a conquest lease offer of $599 per month for 39 months, which applies to customers who currently lease 2016 model year or newer, non-GM vehicles.

0% Loans, On Select Vehicles

According to Cox Automotive, incentives as a percent of average transaction price were 10.6% in December, down slightly from 10.9% in November. Average transaction price is the price people actually pay, after incentives.

The year 2020 was the exception to the rule in a thousand ways, and incentives are another one. Incentives peaked in April and May 2020, according to Cox Automotive, at about 11.7% of average transaction price.

According to Edmunds, 0% loans accounted for 25.8% of auto loan volume in April 2020, and 24% in May. In December 2020, 0% loans accounted for 9.4% of auto loans, Edmunds said. Still, that was a big increase vs. 5.4% in December 2019.

Manufacturers hit the panic button last spring, in response to coronavirus-related shutdowns, and put generous incentives on vehicles that didn’t really need them, many full-sized pickups, at 0% Annual Percentage Rate for terms as long as 84 months.

Once showrooms reopened, the car companies were relieved to find customer demand was still strong, despite higher unemployment. Since new-car inventories were low following the shutdowns, new-vehicle transaction prices went up, and incentives went down.

Research and consulting firm J.D. Power said the average new-vehicle retail transaction price in January was an estimated $37,165, a record for the month of January. The record for any month is $37,966, in December 2020.

The average incentive spend per unit in January was an estimated $3,639, down $510 or 14% from a year ago, J.D. Power said.


Shopping for a new car on Black Friday? Beware of this clever car-dealership trick

Car shoppers finding fewer 0% finance deals

Getty Images/iStockphoto

Planning to visit a car showroom on Black Friday? Car dealers are unly to let you go without a tussle, new research suggests.

Many car manufacturers are launching Black Friday deals. As Autotrader reports, “The deals will also differ from past practices. Gone are the big discounts or cashback offers, and in their place, you are ly to find more lease deals, 90-day no-payment and zero/low-interest loan offers from the manufacturers’ captive finance arms.” 

But finance deals sometimes are not quite as lucrative as they may seem. Just as IKEA store planners tactfully place cheaper items they know many people won’t want to buy near more expensive items so the latter look too good to refuse, car salespeople often advertise higher prices of cars relative to the repayment plan they offer consumers. 

That’s because consumers are much more price-sensitive to car prices than finance charges, according to research findings circulated by the National Bureau of Economic Research this week.

“If dealers have discretion to price both the loan and the car, they can tailor the bundle of prices to specific consumer types,” researchers from Massachusetts Institute of Technology, the Frankfurt School of Finance and Management, the Federal Reserve Bank of Chicago and the Consumer Financial Protection Bureau, wrote.

“This leads to high interest rates for consumers that are less responsive to loan charges and low interest rates for consumers that are more responsive to loan charges.”

“ ‘If dealers have discretion to price both the loan and the car, they can tailor the bundle of prices to specific consumer type’ ”

“On average, consumers behave as if they would pay a dollar more in finance charges to reduce the vehicle price by $0.86.” They also “act as if they perceive finance charges to be at least $380 less than actual finance charges.”

The researchers arrived at that conclusion an analysis of millions of car transactions from 2010 to 2014, the CFPB’s Consumer Credit Panel that tracks auto loan originations and Experian’s EXPN, +0.40% AutoCount database which tracks “market shares of lenders and dealers for the majority of states in the U.S.”

Here are some rules of thumb you can follow to avoid getting overcharged for a new or used car:

“Buying a car is a business decision, not an emotional one,” David Bennett, repair systems manager for the American Automobile Association, told MarketWatch. But it’s “easy to be wooed by the ‘new car smell’ and lose focus,” he added. 

That’s why he recommended consumers enter auto showrooms with a budget in mind and that they stick to it. You should also factor in potential increases in your car insurance payments, gasoline and auto-repair expenses when you construct your budget. 

“The biggest thing people do wrong when entering an auto showroom is falling in love with a particular car, and giving up their ability to walk away,” said Timothy Vogus, a professor at Vanderbilt University’s Owen Graduate School of Business Management. “Not having an alternative always makes it ly one will pay more.”

During the pandemic, the top ten personal car-insurance sellers in the U.S. slashed more than $7 billion in premiums as a form of financial relief to Americans dealing with the impact of the coronavirus-induced recession. That doesn’t necessarily mean car insurance companies won’t raise premiums in the coming months. 

“Once you narrowed your vehicle choices down to two or three, it’s a good idea to call your insurance company and obtain a quote for each vehicle,” Bennet said.

Get a ‘second opinion’ from your bank

Before even discussing finance rates with a car dealer, “consumers should obtain pre-approval their financial institution,” Bennett told MarketWatch. “By doing so, you’ll have a threshold of the highest lending rate that you’ll pay. If the dealer offers a lower rate, then good news — you have saved money,” he said.

It could also give you leverage in negotiating lower terms with the auto dealership, said Vogus, who has taught negotiation classes at Vanderbilt for more than 15 years. “Dealerships will meet often meet or beat those rates,” he said referring to the quotes consumers get from outside sources. 

There is always room to negotiate

“Consumers may have less choice due to limited supply, but that doesn’t necessarily mean less power to negotiate,” Bennett said. “There are, typically, three negotiations that occur when purchasing a vehicle: The cost of the car; the finance rate; and the trade-in value. Deal with each of those negotiations separately from the others.”

Furthermore, the high demand for used cars may open the door to negotiate a better deal on new cars, Vogus said.

“ ‘Consumers may have less choice due to limited supply, but that doesn’t necessarily mean less power to negotiate’ ”

— David Bennett, repair systems manager for the American Automobile Association

But even when it comes to used cars, “there is always an opportunity to negotiate.”

“The high demand for used cars is unevenly distributed so not everyone is experiencing high demand. It may take a little time to find the right deal and it might require more walking away.”

“Know your walkaway price and stick to your target,” he added. “Don’t assume because you can’t get there right away doesn’t mean a good or better deal isn’t possible.”

There is nothing special about Black Friday

In fact, Vogus recommends avoiding “high activity days” Black Friday. 

“There’s lots of potential interest on those days so any given customer is less worth negotiating with because there’s a potentially live option nearby.” Waiting until the end of the month, quarter, or year is better “because dealerships are often up against quotas to receive incentives.”

“You’re more ly to be able to negotiate a better deal when your business is especially valuable or unique,” he added.


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